If you are a student who is distressed by learning about Financial Management, then read on. Managing finances is hard enough in real life, but having to deal with it in academics is simply unreasonable. Alas! Here we find ourselves, cramming for examinations or trying to get that paper in on time.
One of the only retributions in learning about finance is the online financial management help available across numerous sites. In my experience, the online tutor and educational help sites happen to be a great asset with online financial management.
However, if you find yourself too cheap, then let this here help you. What I have here is a ready reckoner to help you understand the basics of finance as a concept.
What is financial management?
In simplest words, it is the planning, organizing, directing and controlling the funds of an organization. It takes care of procurement as well as utilization of monetary resources.
We all know that money makes money and finance is the only thing that educates us on to ‘how’ of it. You would come across numerous articles on how to save money or invest when searching for online financial management. However, it is imperative to understand that studying something and applying it in real life are two very different things.
The financial management we are focused on today is for an organization. Now, let’s understand its definition from various functions.
What is planning?
Planning in English means ‘creation of plans for something’. When spoken in regards to business studies, it is a plan which is formulated to achieve a perfect balance between an organization’s resource and its demands. But it is not as simple as it sounds. When looking up online financial management, it comes across the most prominent management functions and perhaps the most important. The Planning process has 4 major stages: –
- Identifying the goals
- Strategies to achieve the identified goal
- Thinking of resources involved
- Implementing a plan and then monitoring and re-working it as and when required
What is organizing?
They say that a person who is organized tends to achieve his goals sooner and simply becomes successful. The same logic applies to business. It is the same as organizing your thoughts before searching online financial management. When any business sets their goals and then works systematically towards it, they end up achieving it.
Organizing is all about defining the goals, then assigning roles to human resource, delegating duties if necessary with a purpose of achieving those goals.
It may sound like something mundane, however, note that organizing is all about working with human resource, and human resource tends to be capricious.
What is directing?
This is the part where the management hierarchy begins. Directing is all about working with the human resource. It involves motivating, supervising, punishing misdemeanors and the like.
For directing to be 100% successful, a working environment should be built which would help create equal opportunities without any bias. In today’s technology driven world, a manager needs to be great with online financial management and use it to his advantage.
The major parts of directing are as below (not necessarily in sequential order): –
- Communication
- Motivation
- Supervision
- Leadership
The various parts are self-explanatory. However, if you want to look up details then online financial management help would work.
What is controlling?
As the name suggests, it is to ‘take into account’. In management as well, it means to ensure that a business process is as per planning. It works to ensure that a business is working towards achieving the goals at all times.
The controlling components as a matter of fact can be: –
- Fixing a benchmark
- Calculating whether a benchmark is achieved or how close or far it is
- Taking steps to get a process back on track, if the course of action has deviated
Objectives of Financial Management
Most relevant objectives are: –
- To keep a tab on the funds and resources and ensure a steady supply
- To make sure that the shareholder’s (whose money it is in the first place) are satisfied with the earning potential
- To ensure sustainable development. It is very important that the given resources are utilized in the best possible way
- The investments made should be safe with high returns
- To have a worthy capital structure with the right balance between debt and equity
Scope of financial management
The purview of a finance officer changes from time to time as per need. Hence, fixing a definite scope of financial management is difficult. However, online financial management search does come up with many results. Here are the relevant results clubbed into 4 major fields.
- Investment is all about evaluating the profits from a given project.
- Dividend deals with a tough question of how much to give as earnings and how much to plough back into business
- Financing is about utilization and procurement of resources
- Working capital decision involves discussion on equity vs. debt
No business can survive without finance and it is one of the most important management functions in today’s capitalist world.